PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2021: Taxable Income Federal Income Tax Liability Paid Tax-Exempt Interest Income Excess of Capital Loss over Capital Gains Section 179 Expense elected in 2021 Dividends Received from Domestic Corporation (less than 20% owned) MACRS Depreciation deduction Straight-line depreciation using ADS class lives $295,000 3,000 7,000 69,300 15,000 40,000 18,000 10,000 Compute Nomad's E & P for tax year 2021 PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own 50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad Corporation, determine the tax treatment of distribution for the shareholders. (assume each shareholder has adequate basis in the corporation).
PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2021: Taxable Income Federal Income Tax Liability Paid Tax-Exempt Interest Income Excess of Capital Loss over Capital Gains Section 179 Expense elected in 2021 Dividends Received from Domestic Corporation (less than 20% owned) MACRS Depreciation deduction Straight-line depreciation using ADS class lives $295,000 3,000 7,000 69,300 15,000 40,000 18,000 10,000 Compute Nomad's E & P for tax year 2021 PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own 50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad Corporation, determine the tax treatment of distribution for the shareholders. (assume each shareholder has adequate basis in the corporation).
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter18: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 16P
Related questions
Question
Plz answer part 1 & 2
![PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following transactions
in 2021:
Taxable Income
$295,000
Federal Income Tax Liability Paid
69,300
Tax-Exempt Interest Income
3,000
Excess of Capital Loss over Capital Gains
7,000
Section 179 Expense elected in 2021
15,000
Dividends Received from Domestic Corporation (less than
40,000
20% owned)
MACRS Depreciation deduction
18,000
Straight-line depreciation using ADS class lives
10,000
Compute Nomad's E & P for tax year 2021
PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own
50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in
accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad
Corporation, determine the tax treatment of distribution for the shareholders. (assume each
shareholder has adequate basis in the corporation).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc5f610ad-e7af-4dd0-bd7d-ce2be4cdb331%2F5e3881bf-0f2c-4b95-bc67-f51db9d66a02%2Fdnh5hyn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following transactions
in 2021:
Taxable Income
$295,000
Federal Income Tax Liability Paid
69,300
Tax-Exempt Interest Income
3,000
Excess of Capital Loss over Capital Gains
7,000
Section 179 Expense elected in 2021
15,000
Dividends Received from Domestic Corporation (less than
40,000
20% owned)
MACRS Depreciation deduction
18,000
Straight-line depreciation using ADS class lives
10,000
Compute Nomad's E & P for tax year 2021
PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own
50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in
accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad
Corporation, determine the tax treatment of distribution for the shareholders. (assume each
shareholder has adequate basis in the corporation).
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you